It’s a fascinating time in the photonics industry. Fewer than 20 years ago there were a small number of countries involved in our industry, with a total population of certainly fewer than one billion people. Today we face a substantially larger global market – perhaps more than four billion people, with the inclusion of new markets in India, China, Russia and other countries. In addition, technology in our industry has changed profoundly over the same period of time. For example, fewer than 20 years ago diode lasers cost more than $1,000/Watt, while today diode lasers can cost fewer than $10/Watt. The combination of these changes opens up enormous opportunities for our industry. However, to compete in this global marketplace, companies will come under greater pressure and this will force a reassessment of what truly drives a sustainable competitive advantage.
In our industry this assessment has focused too much on the importance of technology. While technology leadership is important, it alone cannot be seen as a true source of sustainable advantage. It is a dependent variable and as our industry continues to change at a faster rate and requires new technologies for new markets, greater emphasis should be placed on the teams that develop new technologies and other sources of competitive advantage.
At nLight, we believe that building a great team is the most important variable in a truly sustainable competitive advantage. We further believe there are three key dimensions that are essential in building a great team: skill, will, and fit.
Skill
The first dimension, ‘skill’, involves much more than simply focusing on specific knowledge and specific experiences. General skills are often the most important determinates of success. For example, the ability to address ambiguous problems is especially important and the telecom bubble provided a great case study: too many people focused on tough technical issues related to optical networks, and too few asked very basic questions about the capacity utilisation of optical networks. The technical questions were very difficult and required time from a large number of people and consumed vast sums of capital. The more general questions about utilisation were in hindsight relatively simple, but sufficiently ambiguous that most people neglected them and trusted simplistic forecasts. To avert these problems in the future, the great companies will need to hire and develop people who are not only highly intelligent and rigorous in their problem-solving skills, but who also are passionate about continuing to learn and grow beyond narrow technical issues.
Will
The second dimension, ‘will’, often trumps ‘skill’ and will become increasingly important as the intensity of global competition drives all of us much harder. As our industry continues to move from highly technical niche markets to much larger but more competitive markets, great companies must certainly contain driven people who can be found on any winning team. But this dimension is not simply about constantly working harder; rather it is the determination and tenacity during tough times that are critical. Developing new products for new markets undoubtedly leads to numerous obstacles. Great companies will have teams that do not become dispirited, but rather are driven to succeed despite obstacles. This characteristic cannot be created through simplistic incentives. Rather, great companies must rigorously search for people who have these inherent characteristics and have demonstrated the ability to overcome obstacles in other areas of their lives. They must also encourage these traits by fostering risk-taking and eliminating short-term incentives.
Fit
Skill and will are requisite characteristics of individuals, but they are not sufficient. How an individual fits on the team is the third and most important dimension we focus on at nLight. This is the most difficult characteristic to find as, all too often, people with great skills and a strong will, also tend to have, for people in leadership positions, an overly strong ego. Strong egos can work for individual contributors and may work for a period of time, but building a truly enduring company requires individuals who exhibit all three dimensions and thrive in a team environment. Hubris is highly detrimental. Contrary to the popular view of the typical celebrity CEO, Jim Collins has shown (see box below) that company performance is inversely related to the size of the CEO’s ego. These empirical results stem from a simple idea: great, enduring companies are built by teams of people who continue to learn and evolve faster than other companies; and humility and self-criticism is critical for anyone to truly learn.
We at nLight believe that these three dimensions are critical to building a sustainable competitive advantage. In addition, they make for a much more rewarding set of experiences. Indeed, the intrinsic rewards of working with and learning from bright, driven, team players is the truly enduring part of what we do.
Recommended reading
Collins, Good to Great, Harper Collins, 2001
Katzenbach and Smith, The Wisdom of Teams, Harvard Business School Press, 1993
